Rights Issue — Section 62 Companies Act

Governed by Section 62(1)(a), Companies Act 2013, read with Rule 12A, Companies (Share Capital and Debentures) Rules 2014. The offer letter must be despatched to existing shareholders at least three days before the offer opens, per Section 62(2), and must give shareholders a window of not less than seven days (reduced by Rule 12A from the earlier 15-day floor) and not more than 30 days to accept — if unaccepted within this window, the offer is deemed declined and the Board may dispose of the unsubscribed shares in a manner that is not disadvantageous to the shareholders or the company. For a private company, where members holding 90% or more of the paid-up share capital give prior written or electronic consent, both the minimum acceptance period and the three-day dispatch notice under Section 62(2) can be reduced below these statutory floors. Once shares are allotted under the rights issue, the company must file Form PAS-3 (return of allotment) with the Registrar within 30 days of allotment.

A rights issue is the offer of new shares to the existing shareholders in proportion to their holdings under the Companies Act 2013 and, for the listed companies, the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 — the offer to the existing members under Section 62(1)(a) of the Act, the letter of offer, the entitlement and the renunciation, the record date, the pricing and the timing, the subscription and the allotment, and the listing. The rights issue is the company's fundraising from its own shareholders, proportionate to their existing holdings.

The rights issue is the capital raise that respects the existing ownership — every shareholder is offered the new shares in proportion to their holding, and those who do not subscribe see their ownership diluted. The process runs under Section 62 of the Act and, for the listed companies, the ICDR Regulations 2018 — the resolution, the letter of offer, the record date, the subscription period, the allotment and the listing — and the pricing is set at a discount to the market to make the issue attractive.

The cost of a broken rights issue is the failed raise and the regulatory price: the issue that is not fully subscribed, the ICDR non-compliance for the listed issues, the allotment that the shareholders challenge. The rights issue is the fastest of the public raises and the most compliance-sensitive.

This service is for companies raising capital by rights issue. We structure the issue under Section 62 and the ICDR Regulations 2018 — the ratio, the price, the record date and the timeline — prepare the resolutions and the letter of offer, manage the subscription, the allotment and the renunciation, file the forms with the ROC and the exchanges, and complete the listing so the raise is valid and complete.